Case Study: $140 MM Multifamily | Development | Las Vegas, NV

Eyzenberg & Company arranged a highly structured acquisition, recapitalization and construction financing package for a three-phase multifamily development project in Las Vegas, NV.

Challenges

The Sponsor was seeking to terminate his original role as a participating junior lender on a three-phase multifamily development project in order to purchase and develop the second & third phases independently.

The existing construction lender had control over all three phases with no pre-set release prices. The first phase was mid-construction, but out of balance loan in danger of not proceeding without a rebalancing equity infusion.
Sponsor was anticipating substantial profits from their participating debt position on phase one and was seeking to efficiently use those profits to capitalize the second and third phases.

Furthermore, Sponsor was several months shy of obtaining a building permit on phase two or a guaranteed maximum price construction contract. 

Solutions

Eyzenberg & Company arranged a financing package to 1) take-out the existing construction lender on Phase I mid-stream with no additional equity contribution required by the existing partners, 2) purchase the second and third phases by independent entities owned by the Sponsor and 3) provide for construction financing for the second phase.

The take-out/refinance of the first phase recognized the equity value created to date and provided sufficient proceeds to fund the cost overruns and complete the construction. The purchase of the second and third phases independently allowed our client’s participating profits to be captured in the third phase entity and rolled as equity into the second phase in a 1031 transaction allowing all the profits to be used without tax leakage and even allowing a substantial distribution to our client in the process.

The acquisition and construction financing for the second phase provided for the Sponsor to purchase the site, fund predevelopment expenses and provide vertical construction funding once a building permit and GMP satisfactory to the lender was obtained.